Correlation Between Ms Global and Aberdeen Global

Can any of the company-specific risk be diversified away by investing in both Ms Global and Aberdeen Global at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ms Global and Aberdeen Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ms Global Fixed and Aberdeen Global Unconstrained, you can compare the effects of market volatilities on Ms Global and Aberdeen Global and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ms Global with a short position of Aberdeen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ms Global and Aberdeen Global.

Diversification Opportunities for Ms Global and Aberdeen Global

0.91

Correlation Coefficient

Ms Global  Aberdeen Global

Almost no diversification

The 3 months correlation between MFIRX and Aberdeen is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ms Global Fixed and Aberdeen Global Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global Unco and Ms Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ms Global Fixed are associated (or correlated) with Aberdeen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Global Unco has no effect on the direction of Ms Global i.e., Ms Global and Aberdeen Global go up and down completely randomly.

Pair Corralation between Ms Global and Aberdeen Global

Assuming the 90 days horizon Ms Global Fixed is expected to generate 0.64 times more return on investment than Aberdeen Global. However, Ms Global Fixed is 1.56 times less risky than Aberdeen Global. It trades about 0.2 of its potential returns per unit of risk. Aberdeen Global Unconstrained is currently generating about 0.05 per unit of risk. If you would invest  518.00  in Ms Global Fixed on December 29, 2024 and sell it today you would earn a total of  10.00  from holding Ms Global Fixed or generate 1.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Ms Global Fixed  vs.  Aberdeen Global Unconstrained

Ms Global Fixed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ms Global Fixed are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ms Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Global Unco

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global Unconstrained are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aberdeen Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ms Global and Aberdeen Global

The main advantage of trading using opposite Ms Global and Aberdeen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ms Global position performs unexpectedly, Aberdeen Global can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aberdeen Global will offset losses from the drop in Aberdeen Global's long position.

The idea behind Ms Global Fixed and Aberdeen Global Unconstrained pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.